“Trench Warfare” And “Civil War” Over Confiscatory Taxes In France

Wolf Richter's picture

Wolf Richter   www.testosteronepit.com   www.amazon.com/author/wolfrichter

“We’re engaging in trench warfare,” proclaimed Alain Afflelou, head honcho and founder of an eyewear company with 1,200 stores in France and other countries. One of the wealthiest men in France. He was talking about the tax fiasco that split France in two. He was done with his country. He’s moving to London. One of France’s so-called fiscal exiles.

He’d set up his international headquarters in Switzerland, rather than France, 15 years ago to minimize his company’s tax burden, but now he’d personally bail out.

The clamor had started in September when it leaked out that Bernard Arnault, richest man in France and CEO of luxury-goods empires LVMH and Groupe Arnault, was applying for Belgian citizenship. In response, Economy Minister Pierre Moscovici threatened to renegotiate the tax treaties with Belgium, Luxembourg, and Switzerland. A few days ago, reports surfaced in the Belgian media that mailbox companies—a dozen at the Brussels apartment of a Groupe Arnault director alone—have allowed Arnault’s empire to escape several hundred million euros in taxes.

Belgium got cold feet. On Saturday before Christmas when nothing was supposed to happen, Anti-Fraud Secretary of State John Crombez requested that Finance Minister Steven Vanackere transfer Arnault’s tax file to the tax authorities in France, an idea the minister did not immediately reject.

Now Arnault got cold feet. LVMH and Groupe Arnault defended themselves the best they could, claiming that these mailbox companies had “economically perfectly real activities in Belgium where some of them have been implanted for decades.” Indeed, they were “surprised” by the allegations.

But no one stirred up the heat in France like iconic actor Gérard Depardieu who, turns out, set up his domicile in Néchin, a village just across the border in Belgium—as the mayor confirmed, “to escape French taxation.”

Final straw for President Hollande. Now he too threatened to renegotiate the tax treaty “to deal with cases of those who settle in some Belgian village.” He lashed out against the “fiscal dumping” that some countries in the EU were practicing. Prime Minister Jean-Marc Ayrault chimed in; Depardieu’s exile was “pretty pathetic.”

Depardieu was not amused. In an open letter, he renounced his French citizenship, broadsided the Prime Minister and the President, and shocked the nation: all taxes combined ate up 85% of his income.

Not true, explained eyewear mega-retailer Alain Afflelou during the interview. “Those who are in the 75% income-tax bracket may go well beyond 90% taxation.” He listed layers of additional taxes, small percentages here and there that added up. “We therefore have in France a confiscatory taxation that can deprive us of all of our income from work.”

Then he uttered “trench warfare” to describe the battle between the two sides. “We have to stop saying that CEOs are thieves, thugs, and dishonest people. We need people who work, who make a living, who create jobs.”

He was echoing Laurence Parisot, President of the MEDEF, France’s largest employer union. “Doubt is taking over the life force of the country,” she complained; Hollande in his confrontation with Depardieu was doing “the opposite of what he promised,” namely to pacify the country and reduce antagonism. “We are in the process of creating a climate of civil war, similar to 1789,” she said.

Hollande jumped on the airwaves and tried to impose some sort of armistice. The 75% tax bracket would be temporary, he said. And concerning Depardieu: “No citizen must be stigmatized by the President.” But by using that word, he stigmatized him—and all the others who’re trying to escape.

There are a lot of them. Le Figaro cited tax lawyers who spoke of “unprecedented waves” of fiscal exiles who were leaving France, some of them in the middle of the school year, which “had never happened before.” Moving companies confirmed it. Outflows “remain two to three times higher than normal,” said the boss of one of them. “Our trucks leave constantly in direction of Switzerland, Belgium, and Great Britain.”

And the profile of the fiscal exiles has changed. They’re no longer rich heirs or fifty-year-olds who’d sold their companies, but “young childless entrepreneurs” who wanted “to settle in another country to start up their companies,” according to one of the tax lawyers. And top executives between 40 and 55 were moving with their kids to Brussels or London “to escape” the new taxes.

Entire skill sets were leaving. International companies were “progressively relocating part of their teams abroad,” said le Figaro’s source within the MEDEF. Among them more and more secondary functions, such as human resources or finance—”much less visible and symbolic than relocating headquarters.”

With heavy consequences for the economy. When talent, entrepreneurial energy, capital, and profits leave the country all at the same time, it’s hard to imagine how economic growth and job creation could miraculously reappear.

Also on Friday before Christmas when nobody was supposed to pay attention, the European Commission issued a mind-boggling report on bank bailouts in the EU: Member States had committed over $2 trillion at the expense of current and future taxpayers to bail out stockholders, bondholders, and speculators. Read.... The EU Bailout Oligarchy Issues A Report About Itself.

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Element's picture

Hollande's only acting jilted 'cause he can't get up and go too.

I can't see him finishing his term, he's adrift. 

Classic case making policy-on-the-run.

New World Chaos's picture

France has a couple thousand tons of gold (most of it which they got from America during its futile attempt to prop up Bretton Woods).  Now, methinks the puppetmasters mean to get France to blow it all in a futile attempt to prop up socialism.  So Hollande will probably be around for awhile.  Remember, when socialism inevitably fails, leftists say it's because there wasn't enough socialism.

samcontrol's picture

Lol, France is not Argentina.
not a chance.

Al Gorerhythm's picture

LOL, not a chance, eh? Dude, the whole world is Argentina. What a nightmare.

topspinslicer's picture

In time the commie dems in the USSA will go beyond the 100% tax threshold I am sure!

FreedomGuy's picture

Tops, while I know you are using some humor I would like to make the serious argument that the natural tax rate in all collectivist societies is 100%. It will always and forever move toward that number. I will also say that the State will also move toward infinite regulation if you measure the number of pages of rules (not even laws) for all of life.

In the shortest possible explanation I can do it is for this reason: Government directly or indirectly asserts that it owns all property and labor. That is why it can set labor rules, prices and conditions. It is why even after a life of high taxation, government can take half or more of your estate at death. It is why there are no Constitutional limits on the amounts and percentages of taxes. You combine this with the leftist belief that all problems in life deserve a government program or control for the common good. These solutions never work and the answer is forever 'more money" and more power. Education is failing in the USA. Have you ever once heard of giving the failing enterprise less money? No. You never will. You will always hear of more "investment" to final get it where it needs to be. So, the combination of unending government failures in all sorts of areas requires ever more rules and ever more money with a little corruption stirred in to make the recipe just right. The end is 100% taxation and a police state.

If you doubt it, look at history.

biteme's picture

Yep, you nailed it. Let's call it what it is - evil - the absolute worst state of the human condition. A simple thug robs a liquor store for some booze and cash and moves on. These psycophants rob you at gunpoint, then come back the next day and tell you they need more, all the while impoverishing everyone in the taxing jurisdiction.

At some joint you have to wonder whether it is truly an orchestrated act, or simply the combined force of a group of people pursuing their own self interest without any restraints or morality whatsoever.

FreedomGuy's picture

Actually, biteme, you nailed it very simply and accurately. Government robs for the robbers so it becomes legal. If you are a principled libertarian you believe that government should not be allowed to do for an individual what would be illegal for that individual to do for themselves, i.e., take your property and income at gunpoint for themselves...in perpetuity as you accurately note. This applies to welfare recipients, subsidized farmers and bailed out bankers. They all rob and steal through government. They all participate in the "legal" plunder of others even as they attempt feeble arguments as to why it is for our own good.

In your own creative way, you have nailed the fundamental core immorality of the collective society. I applaud you and I hope more people come to this epiphany.

falak pema's picture

to achieve that AIM of full throttle statist control, here is the give away line that justifies it, in "democratic mode" today :

"Vous avez juridiquement tort car vous êtes politiquement minoritaires" ...'You are legally wrong as you are in political minority!'

The majority can do what it likes; that's the principle of the Politburo in ONE  PARTY dictatorships.

"We can bend the law as we make the law." 

Now we have that being achieved by Oligarchs via ECB/FED technocrats, with the blessing of crony political front straw men.

The two faces of democracy; Janus. One face, the real one, bows to Oligarchs; the other, the sham one, passes the laws to that effect; and its TRUE for both sides of the aisle; red and blue, conservative and socialist.


FreedomGuy's picture

Falak, I agree with you in the main but I am going to categorically disagree with the "Money rules..." statement. Actually, the end game, the real social aphrodesiac is power itself. Look at all the leftist-communist societies. They are all poor, all 100% of them. Power is the end game and what men desire most. Money does influence power but it never completely controls or else all the wealthy would directly take power. Mao had it right when he said "All power comes from the barrel of a gun." The government always owns the guns. Simple dictators enrich themselves.

However, the truly powerful will shoot the rich or confiscate their property when it suits their needs. It is also why other groups like unions can contribute not only money but muscle and are therefore useful well.

Here is the saying I have come to:

"Control is an illusion. Influence is a reality."

If you have ever raised teens you will immediately recognize the truth of that statement. It also applies to societies.

Eugend66's picture

He hehehe, Man, you nailed it!!

Quote: Government directly or indirectly asserts that it owns all property and labor.

mvsjcl's picture

"It is why even after a life of high taxation, government can take half or more of your estate at death."

Unless, of course, you're part of the 0.001% who have the means to set-up foundations; you know, so that you can "give" all that money you "earn" to worthwhile "charities." A good read: http://www.americanthinker.com/2011/09/private_foundations_benefactors_o...

Rogue Trooper's picture

FeeDomDude... I like your optimistic take on the collectivist view that 100% as the natural tax rate.  I think the central planners would not stop there.  Sure 100% on future income makes perfect sense.  But what about prior earnings, opps! I mean prior theft by evil capitalist on the back of honest labor and exploitation of the culturally disadvantaged.  A 100% progressive wealth tax on ALL existing capital, foreign and domestic, that is sensibly calculated by clever PHd's on all prior earnings would seem only fair. That way the utopian vision of everyone being truly equal would come to pass and ALL would be happy.

Merry Xmas ZHers - what a fucked up world!



August's picture

"Have you ever once heard of giving the failing enterprise less money? No. You never will."

Some years back, the Seattle city schools had an openly stated policy of giving extra funding to those schools which showed the weakest academic results.

You can imagine just how well that worked out.  After enough years of ever-declining performance, even public school administrative types finally had enough insight to change the policy.

Things that go bump's picture

The one thing publics schools need most is more administrators.  

cognus's picture

FG is exactly right, and calmly rational.  its not just "totalitarian" states that inexorably move in this direction, its all central governments that do not have strict limits posed on their reach and/or duration [members/electeds].  What stops a cancerous tumor?  The death of the host.

FreedomGuy's picture

It is interesting that the U.S. Constitution has been almost 100% abrogated through creative interpretation and selective application of it's meaning. The Supreme Court over time has ruled that the American Constitution is in fact a collectivist document. Yet, if you gave it to any reasonable speaker of English you would not get that from a simple reading. In fact, you would arrive at a strictly limited government.

Even legal limits on paper do not seem to be able to overcome or abate a cultural shift to dependency. Weakness follows dependency.

Imminent Crucible's picture

"The end is 100% taxation and a police state."

Well, not quite. There's one more step after that. Confiscatory taxation and the crushing costs of unproductive state security--cameras everywhere, snoops everywhere, cops and SWAT teams and TSA everywhere--eventually destroy the economy altogether. Then comes the real end: war and social chaos.

FreedomGuy's picture

Imminent, I don't think you and I disagree. Can we call it an autocratic state? The cameras and remote policing (that is highly profitable) that are popping up everywhere really concern me. You are up against a machine if you go to court to protest or resist. The emperors of old had wet dreams about the kind of information and control that our "free" states now have.

Have you also noticed that nearly all movies about the future postulate some dystopian state of affairs? There is some unconscious realization of where we are headed.

kaiserhoff's picture

If not on their own, certainly with a little hep from Calipornia and the triple tax of New Yawk, New Yawk.

topspinslicer's picture

The Great Ayn Rand was all over this decades ago!!!!!!!!!!!!!!!!!

toncuz's picture

The traitors who call themselves "galt" left society years ago when they decided to rape and pillage the average worker and keep all the profits...destroying the middle-class. Thanks..."trickle-down", right-wing central planning, corporate state, neo-fascist creeps.

agent default's picture

Move to North Korea already and leave us alone.

Rogue Trooper's picture

Yawn..... yet another Troll.

They sure keep on coming. Mind you it's a tough audience so I guess they have to try.

Sad part is 'TonCuntcuz' sounds like he actually beleives the progressive sheet he's been fed by the Blue team.  So he TROLLS for free.

Still nothing like a usefull idiot is there now.  If he's real lucky he will get a job satisfying the thugs at the FEMA camp when this plays out.  Advice, bring your ELMO outfit ... they really like that.  Best part is that you, toncuz, could earn an extra can of CATFOOD on SHIT SHUNTIN' FRIDAY!

FORWARD... because it's worth it!

lakecity55's picture

Yeah, who's the asshole who always does a -1 on any post critical of our Beloved Overlord?

Anybody with 1 grain of common sense can seethe man is a puppet who reads well and has had coaching in NLP to speak to crowds.

Besides that, he's an asshole.

Bollixed's picture

Oh, give him a break. He was probably educated by the American school system. Garbage in - garbage out, don't cha know...

Rogue Trooper's picture

Fair enough.... not much of a start, what with the new maths, and so on.

Perhaps after not making the cut for Delta he can try for a Harward MBA?

Merry xmas Dude!

sun tzu's picture

Go find another host, you left wing parasite bastards

PivotalTrades's picture

You Sir have been brainwashed

El Oregonian's picture

I believe they are french, they have a french sounding name... DeGalt?

CH1's picture

If people trained to be abject statists every day of their lives can rebel... maybe there is some hope.

It sounds rediculous, but facts are not to be ignored. Frenchman are rebelling against the Sacred French Nation.

Who'da thunk it?

AnAnonymous's picture

Nothing. Just plain old 'american' behaviour. When the time is up to pay the bill, 'americans' bail out.

The world is shrinking and do not want to sound racist, but the chickens are coming home to roost.

'Americans' wont endure 'americanism'' bad side. The bad side is designed for other people than 'americans'

No rebellion.

'Americans' do not rebel against 'americanism'
Not a single second in their life.

CompassionateFascist's picture

Heroic America is bristling with guns about to go off. China drowns in roadside growlers emited by the "citizens"...and where are all the puppy dogs?

seataka's picture

They are rebelling against the bankers...


off with their heads

hooligan2009's picture

hmmm....rats looking for the next sinking ships methinks..pretty sure that these sorts of people aren't wanted anywhere particularly.

sun tzu's picture

Yep, you obozos want more parasites, thugs, and scum

Buckaroo Banzai's picture

Yeah, all they do is invent products, provide services, start companies, hire people, and generate gigantic amounts of economic activity. Who wants that shit in their neighborhood?

AnAnonymous's picture

So more consumption.

For a fact, it is known that 'americans' know no other cures for the ailments of 'americanism' than more 'americanism'

An overconsumption issue can only be solved by even more consumption.

And as a corrolary, the responsibles for an over consumption issue are non consumers.

Self indiction is a big thing in 'americanism'. Definitively.

'Americanism' is all about submission. 'Americans' always come up with a big, thick lie you have to submit to to be part of the gang.
Threat: if you are not with them, you are against them.

'American' freedom, truth and justice.

CompassionateFascist's picture

Chicom troll emits another roadside growler, then stalks the local puppy. 

Urban Roman's picture

That's sooo 1960s.

It's "Chicap" now.

JeffB's picture

It's the dreaded "brain drain" of decades past when Europe decried all the talent heading to the U.S. and the low tax free markets there.

Too bad we can't offer the tax refugees that anymore.


Imminent Crucible's picture

Send them to Texas. Most of the productive people of California are already there, or are on their way. Houston, Austin, DFW--all booming.

max2205's picture

Europe is basically a medium sized country. There will be no place to hide

rsnoble's picture

Good lord don't  come to the US whatever you do.

DoChenRollingBearing's picture

@ rsnoble

Actually we have a few young French entrepreneurs in the humble building where I work.  I have not had a chance yet to find out what they DO, but I'll get to it.  I would be curious to hear THEIR views on M. Hollande as well...

Chuck Walla's picture

Obama is takng copious notes...


Stackers's picture

Only in France would there be an employER union

toncuz's picture

There are THOUSANDS of unions in America for employERS and business...THEY'RE CALLED LOBBIES...the people who paid off your Congress to destroy the middle-class by destroying worker's unions. Only when the working class asks for a union does the pig society call it "socialism".